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by Admin
19 December 2025 4:21 PM
"Designation Under MPID Act Is Not a Jurisdictional Straitjacket—Sessions Court Retains Full Powers to Try IPC Offences Arising from the Same Transaction", Justice Amit Borkar of the Bombay High Court delivered a detailed and significant judgment in the bail application filed by Milind Satish Sawant, accused in a multi-crore fraud case registered under the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 (MPID Act). The Court rejected the bail plea, holding that "economic offences involving deep-rooted conspiracies and massive diversion of public money stand on a different footing, since they seriously affect the economy of the nation and corrode the trust of the common man."
The case was filed under Sections 406, 409, 420 r/w 34 and 120-B IPC and Sections 3 and 4 of the MPID Act, relating to a Ponzi-style fraudulent investment scheme operated by the accused under the banner of Mars Finnmart.
The Accused Ran a Financial Mirage: "Extraordinary Returns of 10% Monthly Were Never Sustainable"
The Court noted that the applicant, along with his co-accused, promised returns as high as 5%–10% per month under the guise of stock market and mutual fund investments. Investors were lured into taking personal bank loans to participate in the scheme, based on the accused's false promise that profits from the investment would cover the loan installments.
One such victim was a municipal corporation employee who was introduced to Mars Finnmart in November 2020, persuaded to take five separate bank loans totalling ₹38.19 lakhs, and directed to transfer ₹34.30 lakhs directly to the accused’s firm. The Court observed that "the promise of repayment at the rate of 5% to 10% per month was impossible from the very inception, which itself shows that the entire scheme was fraudulent in nature."
"Sessions Court, Even When Designated, Retains Original Powers Under Cr.P.C."
A core legal issue raised by the defence was that the Designated Court under the MPID Act lacks jurisdiction to try offences under the Indian Penal Code, and can only try offences under the MPID Act. The defence cited procedural distinctions and argued that trying IPC offences in the Designated Court deprives the accused of a valuable appellate forum.
Rejecting this argument, the Court ruled: “The Sessions Court, even after being designated as an MPID Court, continues to exercise its full powers under the Cr.P.C. as a Sessions Court, while also exercising the additional jurisdiction conferred by the MPID Act.”
The Court underscored that such designation "is an enlargement of jurisdiction, not a restriction." Accepting the applicant’s argument would result in an absurd bifurcation of trials, causing “unnecessary multiplicity of proceedings” and potentially “conflicting findings by different Courts on the same set of facts.”
Justice Borkar firmly held that "the legislative intent was to empower the Designated Court to deal with the entire transaction holistically," including IPC and MPID offences arising from the same conduct.
"Siphoning of Public Money Is Not a Civil Wrong Disguised—It Is Criminal Breach of Trust Under Section 409 IPC"
The Court found that the facts revealed clear entrustment of funds and misappropriation by the accused:
“The complainant and more than a hundred other investors entrusted their hard-earned money to the applicant… Instead of using the entrusted money for genuine investments, the applicant siphoned large sums into his personal account.”
Rejecting the claim that it was a failed business deal or civil breach of contract, the Court clarified:
“The defence argument that this is merely a civil breach of contract or a failed commercial transaction is not convincing at this stage… Once it is prima facie shown that money was entrusted for a specific purpose and that the same has been dishonestly diverted or misappropriated, the matter ceases to be a mere civil dispute.”
The Court held that the applicant assumed the role of an agent or fiduciary, and his conduct squarely attracted Section 409 IPC, which prescribes imprisonment for life or up to 10 years for criminal breach of trust by one holding a position of trust.
"Repayment of a Fraction Doesn’t Undo the Criminality of the Scheme"
Although the applicant claimed that part of the money was returned and cited another case (Crime No. 123/2021) where he was granted bail, the Court was unpersuaded:
“Repayment, whether full or partial, does not undo the initial wrongful act of inducement, deception and misappropriation, if the basic ingredients of the offence are otherwise satisfied.”
Regarding the plea for parity, Justice Borkar remarked:
“The principle of parity cannot be applied in a mechanical fashion. The present case involves more than 127 investors and an amount exceeding ₹7.29 crores… whereas the earlier case involved only 25 investors and about ₹82.70 lakhs.”
The scale, the sophistication of the scheme, and the repeat offending behaviour of the applicant were all held against him.
"Money Collected with Assured Returns Is 'Deposit' under MPID Act": Court Rejects Bail on Jurisdictional Grounds Too
Addressing the argument that the money collected does not qualify as a "deposit" under Section 3 of the MPID Act, the Court categorically stated:
“On a plain reading of Section 3… any money received under a scheme which promises return in cash or kind qualifies as a ‘deposit’.”
The Court emphasized that this contention, even if arguable, is a matter of defence and cannot form the basis for bail at this preliminary stage.
"Liberty Is Valuable, But Not at the Cost of Public Trust": Bail Rejected Considering Scale of Fraud and Risk of Repetition
The Court acknowledged the fundamental right to liberty under Article 21 but noted that in economic offences, that right is subject to societal interest:
“While liberty under Article 21 is sacrosanct, it must give way to the larger public interest when the allegations disclose organised financial frauds of such scale.”
The judgment cited Supreme Court precedents (Nimmagadda Prasad v. CBI, Y.S. Jagan Mohan Reddy v. CBI) and emphasized that “economic offences involving deep-rooted conspiracies and massive diversion of public money stand on a different footing.”
The Court concluded: “Grant of bail in such circumstances would not only undermine public confidence in the justice system but may also encourage repetition of similar fraudulent acts.”
No Bail, Strong Prima Facie Case, and Grave Societal Impact
In sum, the Court found that the accused, Milind Sawant, was part of a well-orchestrated conspiracy that defrauded over 127 investors to the tune of ₹7.29 crore, with clear prima facie evidence of entrustment, inducement, and misappropriation.
The Designated MPID Court was held to be fully competent to try IPC offences arising from the same set of facts, and the argument that such designation violates Article 14 or 21 was rejected as baseless.
Date of Decision: 4th September 2025
